Current Account Deficit widens to 4.9 per cent of GDP

However, economists expect the gap to ease in subsequent quarters as government steps to increase the import duty on gold have constricted imports of the metal, while improving global demand and a weaker Indian currency are expected to help exports.

India's balance of payments slipped marginally into deficit for the June quarter at $346 million versus a surplus of $2.68 billion in March quarter.

Current Account Deficit widens to 4.9 per cent of GDP

India's financial and capital account, which includes foreign direct investment, portfolio investment and overseas borrowing by Indian companies, was a surplus of $20.8 billion in the June quarter compared with a surplus of $17.8 billion in the March quarter.

India's high current account gap has made the country especially vulnerable to a surge in capital flows out of emerging markets in recent months, sending the rupee down as much as 20 per cent this year to a record low on Aug 28, although it has since recovered some of that ground.